State of the State: Problems at Central Management Services contribute to a credibility deficit

Dec 1, 2005

Pat Guinane
Credit WUIS/Illinois Issues

Paul Campbell sports a sharp suit and perfectly coiffed silver hair. He's the face of a state agency looking to shed its reputation as a sluggish bureaucracy and adopt a slick business model. Campbell wears it well. Meanwhile, his agency, the Department of Central Management Services, has been draped in a veil of optimism. Anything to avoid an unflattering spotlight that has cast shadows across the administration of Gov. Rod Blagojevich. 

The department's contracting practices were the subject of ethics reforms that moved out of the Illinois House last month. And the contracts themselves were on trial, too, with Auditor General William Holland wielding the gavel.

In short, the ongoing transformation of Central Management Services hasn't been cheap or easy. Holland said as much last April when his initial audit of CMS revealed two dozen problem areas, not the least of which was the roughly $70 million the agency spent to bring in outside consultants. At the time, CMS officials said those firms had helped save the state $621 million. But auditors could not substantiate that number, so legislators told Holland to keep poking around at CMS.

Holland never found a receipt scribbled with the elusive $621 million figure. For that matter, neither did CMS. Instead, the agency paid a private consultant nearly $1 million to validate its contention. The result: a 157-page report showing nearly $530 million in savings. The report wasn't delivered to Holland until well after his office had closed the case on CMS.

"I believe this approach does nothing to enhance the credibility of the Department of Central Management Services," Holland told the Legislative Audit Commission. "For all involved, this is unfortunate."

With a re-election announcement looming, CMS is among the reasons credibility is in short supply for Blagojevich, the first-term Chicago Democrat who promised to end business as usual. Holland's audit came just days before Blagojevich's office said it would no longer comment on the growing number of subpoenas arriving on state government's doorstep.

Last spring, the first audit of Central Management Services hung a dark cloud over the administration. Holland says the skies have yet to clear.

The auditor general expressed particular concern over one efficiency contract executed by CMS. It was a more-than-$30 million real estate management pact with Illinois Property Asset Management, a clout-heavy Chicago consortium that didn't exist on paper until two weeks after it won the contract.

With a re-election announcement looming, CMS is among the reasons credibility is in short supply for Gov. Rod Blagojevich, the first-term Chicago Democrat who promised to end business as usual.

Company officials took a CMS employee out to dinner two weeks before the firm was selected. The firm was the only bidder allowed to revise its final offer and used the opportunity to slice $10 million off its original price. Later, CMS increased the contract by nearly $6 million.

CMS allowed the firm to bill state taxpayers for $31,221.16 in questionable expenses, including alcohol, candy and parking at a Chicago Bulls game. The governor eventually fired the firm over those expenses. And now, Illinois Property Asset Management is suing the state.

"From start to finish, the department's handling of this contract is troubling," Holland says. "I'm unable to understand how, at so many junctures, the system could have failed."

With those concerns in mind, a reporter asked Campbell whether Illinois Property Asset Management provided a blueprint for how not to handle a contract.

"No," Campbell responded. "I believe, ultimately, the initiative that we did has been very successful. We are now taking the 60 million square feet of real estate, that before people couldn't even identify what we owned and now we're managing it in a much more effective manner. It's unfortunate that we're in litigation, but I still believe the initiative and the mandate from the governor to run the business of government more like a business was the right thing to do."

Perhaps the concept was good, but wasn't the execution poor?

"I don't believe so because I think we have successfully consolidated the agencies under CMS," Campbell answered. "We're now managing that portfolio much better. In Chicago, at the Thompson Center and the Bilandic Building, we have — by restacking — we created 50,000 more square feet of space. It's been successful. It's working."

There's that unflappable optimism. Perhaps Campbell is simply taking cues from his boss. A few days before the latest CMS hearing, Blagojevich responded to the first batch of federal subpoenas seeking hiring records from state agencies.

"Part of all of this scrutiny is sort of a natural byproduct of governing in today's environment and for those of us who feel good about our systems, we're happy to have it," Blagojevich told reporters. "I know this government is operating more efficiently, more effectively and more honestly than my predecessor's or the previous administration's." 

Those comments, of course, came before the administration stopped confirming the arrival of subpoenas.

Over at CMS, Acting Director Campbell often intersperses his public comments with the word "transparency." Perhaps, like the savings evaluation, the term is an evolving concept for the agency. Last summer, as they were returning to CMS, Holland's auditors received an e-mail stating that all information from CMS would be funneled through a single employee, and all auditor requests must be put in writing.

"In all the years that I have been auditor general and for as long as any member of my staff whose history with the office is longer than mine, no one recalls such an overt action by a state agency to control access," said Holland, who has been auditor general since 1992.

It took six weeks and a memo from Campbell to end that bottleneck. But it wasn't until after the audit was complete that CMS released the Deloitte Consulting report claiming $529.5 million in savings. CMS offered the document to select reporters the night before it was delivered to Holland.

Campbell says CMS now has a savings figure it can stand behind. But, despite its length, the Deloitte report leaves many questions unanswered. The facilities management initiative, for instance, got credit for $62.9 million in savings linked to a smaller state workforce.The report doesn't credit a single dime to Illinois Property Asset Management, nor does it subtract the $13.3 million the state paid the firm. 

Illinois Issues sought to ask Campbell about this and other topics, but he twice missed meetings his press aide had scheduled with the magazine. On the first occasion, he left a reporter waiting outside his office. The second time, he left the same reporter in his conference room while he went to mend fences with a legislator. It was a few hours after the Legislative Audit Commission hearing, and, by late afternoon, Campbell's meticulously groomed hairstyle looked uncharacteristically rough around the edges.

On the eve of a re-election announcement, the same could be said for the Blagojevich PR machine.

 

Veto session recap

The fall legislative session was supposed to start with a bang — an address by Gov. Rod Blagojevich. Federal prosecutors beat him to the draw, subpoenaing state agencies on the eve of the speech about his All Kids program. The governor ducked reporters after his address, preferring to "focus on an actual substantive problem and a solution to deal with it instead of just constantly talking about scandals," an aide told reporters.

In week two, Chicago White Sox Manager Ozzie Guillen and Chairman Jerry Reinsdorf stopped by the capitol to celebrate the team's first World Series championship since 1917. 

All Kids was approved by both chambers, with lawmakers letting Blagojevich decide the details through administrative rules. Next July, the state will offer health insurance to children whose parents can't afford private coverage but aren't poor enough to qualify for free health care.

Gun rights will not expand as lawmakers couldn't overturn three vetoes. The closest call came on a measure to eliminate stricter local gun transport laws.

Juvenile offenders will no longer go through the Department of Corrections under legislation the governor plans to sign. A new agency will focus on education, counseling and treatment. New hires must have backgrounds in those areas.

Ethics reforms were ignored by the Senate. Those advanced by the House didn't seek to end links between campaign contributions and contracts.

Martin Cohen was rejected by the Senate, forcing the governor to find a new candidate for the Illinois Commerce Commission. Opponents of the appointment cited potential conflict of interest problems for the longtime consumer advocate.

Riverboat gambling would end under an election-minded measure approved by the House. The bill was a no-go in the Senate.

Illinois Issues, December 2005